+65 97236684

  clients(at)opencompanysingapore.com

+65 97236684
clients(at)opencompanysingapore.com
Company Formation Singapore

CHECK COMPANY
NAME AVAILABILITY (Step 1)



Articles

Setting Up a Subsidiary in Singapore

Updated on Wednesday 23rd December 2020

Rate this article
5 5 1
based on 12 reviews


By Vlad Cuc, specialist in company formation matters 

Foreign companies wanting to settle in Singapore can opt to register a subsidiary, a branch office or a representative officeSubsidiaries can be registered in Singapore as private limited liability companies whose majority shareholder is another corporation. The parent company can be local or foreign. Our company incorporation experts can assist businessmen who are interested in setting up a private limited company in Singapore.

Considering the fact that companies to be registered must appeal to the services of a professional firm, our specialists in company formation in Singapore can draft the Articles of Association of the company and perform all the legal requirements for company registration. We can help with the entire procedure of registering a subsidiary in Singapore.

The main characteristics of subsidiaries in Singapore

Most of the times, foreign companies seek to set up branch offices or subsidiaries, as these are two main business forms recommended for expansion. Even if both types of structures have their advantages, the subsidiary is more flexible when it comes to the activities it can undertake.

Here are the main features of a subsidiary in Singapore:

  1. it can take the form of a private or public limited liability company and will be treated like a domestic business;
  2. it will operate as an independent entity and the management in the Singapore subsidiary will make decisions on its behalf;
  3. it can undertake the same activities of the parent company, however, it has the freedom of completing additional undertakings;
  4. from a taxation point of view, the subsidiary is treated like a Singapore-tax resident company;
  5. it can own assets under the form of real estate in Singapore and have its own corporate bank account;
  6. it will be registered under the regulations of the Company Law in Singapore and will need to meet the incorporation requisites imposed in the city-state.

Many times foreign companies choose to set up subsidiary companies in Singapore thanks to the favorable taxation system imposed on local companies. In most cases, the subsidiary will take the form of a private limited liability company in Singapore.

When choosing to open a subsidiary it is important to note that the parent company can own the entire stock or all the shares in the Singapore company, which is one of the greatest advantages of the city-state over other countries in which this is not possible. Other requirements for creating a subsidiary in Singapore refer to the local business to have a registered address in the city-state, as well as a resident secretary. Also, no later than 3 months after completing the incorporation procedure, the subsidiary must appoint an auditor.

If you want to open a company in Singapore and need advice on choosing a business entity, our local agents can guide you. We can also assist with various nominee services for your subsidiary, among which nominee director and secretary in order to ease your operations in this state.

Requirements for setting up a subsidiary in Singapore 

Foreign companies are allowed to fully own subsidiaries in Singapore, but at least one of the directors of the subsidiary must be a citizen, have permanent residency or an employment license in Singapore. The directors of a Singapore subsidiary must have clean criminal records. The minimum share capital required to set up a subsidiary in Singapore is 1 S$, as according to the Company Law there is no required authorized capital when establishing a subsidiarySingapore subsidiaries are required to have registered offices and a secretary that must be a resident. Within the first three months from the subsidiary registration an auditor must be nominated because audited accounts must be submitted with the tax authorities each year.

Business form available for subsidiary company formation in Singapore

When registering a subsidiary in Singapore, the Company Law provides for several types of legal entities that can be employed, as the subsidiary will be treated like a domestic company, therefore it will use a business form acknowledged in the city-state. Among these, foreign companies can use private and public limited liability companies, and exempt companies. Thanks to the easy registration requirements, the private limited liability company remains the choice of most foreign companies setting up operations in Singapore.

Trading name reservation for a Singapore subsidiary

One of the particularities of opening a subsidiary in Singapore is that it is not required to bear the same name as its parent company. From this point of view, the representative registering the subsidiary must submit a reservation application for a trading name. The selected name must be unique and must comply with the legal requirements imposed in the city-state.

We can handle the trading name reservation as part of the company formation procedure in Singapore. Businessmen interested in investing in other jurisdiction, can receive help from our partners. For example if you need company incorporation services in Switzerland, our local partners are at your disposal.

What are the documents required for setting up a subsidiary in Singapore?

The following documents must be submitted with the Singapore Trade Register:

  • -        the certificate of incorporation of the parent company,
  • -        a statement containing the registered address and directors of the parent company,
  • -        the decision of appointing the subsidiary’s representative in Singapore,
  • -        copies after the passports and proof of residential addresses of the subsidiary’s directors,
  • -        the parent company’s resolution appointing the directors,
  • -        the registered address of the subsidiary in Singapore,
  • -        the Articles of Association of the Singapore subsidiary

The main particularities of a subsidiary in Singapore are described in this scheme created by our Singapore company formation team:

How-to-set-up-a-subsidiary-in-Singapore

Independence from the parent company

One of the main features of the subsidiary company is that it is a fully independent legal structure from the parent company. The main aspect to consider is that the parent company will be connected to the subsidiary in Singapore through ownership. It is useful to note that Singapore companies can also set up subsidiaries, however, they will usually employ the branch office they can have control over.

When it comes to foreign companies setting up subsidiaries in Singapore, these will usually ensure the independence of the latter by appointing a management team and by filing separate financial returns at the end of the year.

If you want to open a company in Singapore and need more information on the requirements for creating a subsidiary, our local advisors can guide you.

Sister companies as subsidiaries in Singapore

The subsidiary company can take various forms when created by local or foreign companies in Singapore. A parent company can register several companies known as sister companies. In this case, the parent company will be considered a holding company while the subsidiaries will be treated like sister companies. The important aspect to consider is that the subsidiaries of the Singapore holding company may undertake completely different activities, the only connection between them being the parent company.

Singapore is one of the most reputable business centers in Southeast Asia and thanks to its favorable taxation system, the city-state is used by foreign companies in Europe seeking to establish presences in Asia by creating subsidiaries. Moreover, Singapore provides for the Regional Headquarter Scheme under which companies using Singapore as their legal seats for regional operations in Asia can obtain substantial benefits.

The subsidiary company will be treated like a tax resident company in Singapore, while the parent company will have limited liability in terms of the debts and obligation of its subsidiary.

Among the specific particularities of setting up a subsidiary in Singapore, we mention the following:

  • - it is possible for the subsidiary to use the same currency for the paid-up capital as the parent company, this way, the accounting requirements will be simplified for both entities;
  • - the subsidiary and its parent company will be able to establish their financial years independently, thus streamlining their operations;
  • - the name of a subsidiary company can be different from that of the foreign entity;
  • - the subsidiary can repatriate all its profits to the subsidiary freely.

If you need more information on the taxation of subsidiaries or the treatment applied to holding companies in the city-state, our company registration consultants in Singapore can answer your questions.

Hiring employees in a subsidiary in Singapore

There are no restrictions to the number and nationality of employees a Singapore subsidiary can have, however, when it comes to employing foreign citizens, work visas are required. This is also a mandatory requirement for the foreign directors in the company.

An important aspect to consider when hiring foreign employees in Singapore is that there are several types of work permits available, and it is important to choose the correct ones depending on the level of expertise and qualifications of the workers. In the case of company directors and managers, the Employment Pass for experienced professionals is required.

Our agents in Singapore can explain the employment requirements when hiring personnel for companies in the city-state.

Taxation of subsidiaries in Singapore

A Singapore subsidiary will be subject to the same tax regulations applied to all companies registered in the city-state. The corporate tax rate is 17% in Singapore. However, there are companies which can use subsidiaries for tax efficiency strategies. This is the case of holding companies which can establish subsidiaries in Singapore with the purpose of owning shares on which they will be not levied withholding taxes. It is best to ask for accounting services related to the taxation of subsidiary companies in Singapore.

Subsidiary companies can obtain EORI numbers in Singapore and trade in the EU on behalf of the parent company.

Yearly filing requirements for Singapore subsidiaries

As an independent company, a subsidiary must respect the same annual filing requisites as local companies. According to the Company Law, all companies must file an estimated chargeable income (ECI) form three month before of the end of the financial year. The company must also hold an annual general meeting of the shareholders in which the financial status of the business. One month after the annual meeting, the company must also file an annual return with the Inland Revenue Services in the city-state. Please note that there are different requirements for the annual general meeting which depend on the time of registration of the Singapore subsidiary. Also, for certain subsidiaries, audit requirements will be in place.

Please note that will also offer virtual CFO services for your subsidiary in Singapore.

Tax benefits for subsidiaries in Singapore

It is good to note that a subsidiary can benefit from various tax advantages, as well as audit exemptions. The criteria to meet in order to qualify for the audit exemption imply the subsidiary to be part of a small group, as it follows:

  • - the aggregate turnover of the group cannot exceed 10 million SGD in a tax year;
  • - the aggregate balance sheet of the group cannot exceed 10 million SGD at the end of a financial year;
  • - the group has no more than 50 employees at the end of each financial year;
  • - at least two of these criteria must be met in order to qualify for the audit exemption;
  • - as a tax advantage, a subsidiary can obtain a 0% corporate on the first 100,000 SGD for 3 years, if the parent company owns at least 10% of the voting shares.

An important tax advantage offer by the subsidiary to the parent company is that the dividends and profits are exempt from taxation in home country of the latter provided that corporate tax in the respective state is at least 15% and if the corporate tax had been paid in Singapore.

For this purpose, tax minimization solutions for the Singapore subsidiary can be set in place with the help of our local specialists.

The subsidiary is a very appealing way of doing business in Singapore and if you need assistance in setting one up, our agents are at your disposal with complete company registration services.

 

Other requirements for subsidiaries in Singapore

Once the subsidiary is incorporated, it must comply with additional requirements, among which applying for various licenses and permits. It is important to note that a subsidiary can operate in most of the industries in Singapore and many times, such a company will undertake trading activities, case in which it must register and set up a special account with the Singapore Customs.

The subsidiary must ensure it has registered office which stays open at least 3 hours per day during business days. It must also have a seal, while the business registration number issued by ACRA must be  printed on all official documents issued by the subsidiary.

Our Singapore company formation consultants can offer detailed information on all the requirements to be met after incorporating a subsidiary.

You can also watch the video below for more information on how to open a company in Singapore as a subsidiary:

 

The procedure for subsidiary registration presented by our Singapore company formation agents

The registration process of a Singapore subsidiary is quick and easy once all the documentation has been properly prepared. The first step will be to submit an application for the approval of the subsidiary’s name and the second step will be the company incorporation. The process usually takes about two days. The Singapore subsidiary must also open a bank account with a local bank. In case you are thinking of opening a branch office in Singapore instead, you can rely on our help.

Please contact our local representatives who can provide you all the information about the process of opening a company in Singapore

 

Why choose us?

Roger Pay is the Managing Director of Bestar and an experienced company formation consultant. He will help you open your company in Singapore as fast as possible. 

singapore-company-formation-team.jpg

As a Bestar clientyou will benefit from the joint expertise of local lawyers and consultants for opening an offshore company in Singapore.

Company-formation-Singapore-agents.png

Company-formation-Singapore-cost.png

Company-formation-Singapore-24.png

Company-formation-Singapore-1000.png







Call us now at +65 97236684 in order to set up an appointment with our consultants in Singapore

 
Contact